WASHINGTON, D.C. — The U.S. Department of Education and the American Federation of Teachers (AFT) reached an agreement last Friday to reopen the path to student loan forgiveness for millions of Americans who have been repaying their loans for decades.
The settlement ends months of legal battle over the administration’s efforts to block student debt cancellation for borrowers in the Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE) plans. It also requires the Department of Education to deliver the relief without surprise tax bills caused by bureaucratic delays.
Mitria Spotser, vice president and federal policy director at the Center for Responsible Lending (CRL) made the following statement in response to the announcement:
We commend AFT for its leadership and persistence in holding the Education Department accountable to the law. This settlement will resolve the teachers’ union’s lawsuit and will provide life-changing relief for millions of borrowers who have carried the burden of unaffordable student debt for far too long.
For decades, the federal student loan system has kept millions of borrowers trapped in cycles of debt. This action demonstrates the power of advocacy in rebuilding public trust and ensuring that federal student loan programs function as the law intended.
We urge the administration to build on this progress and deliver comprehensive relief for borrowers still struggling under the weight of student debt.
ICR and PAYE are set to phase out as of July 1, 2028, under President Donald Trump’s “Big Beautiful Bill.”